Solutions to Common Retirement Income Challenges

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Solutions to Common Retirement Income Challenges

• Kenneth Junge
• Regional Annuity Specialist

For Internal Use Only. Not for distribution to
the general public.
Approval Code A7CD-0814-02
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Todays Agenda

• Solving for Clients Income Needs
• Common Retirement Concerns
• Pension Style Income

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Solving for Income NeedsTrue Retirement Planning
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Solving For Income Needs
Core Living Expenses Core Living Expenses
Housing 3,050
Utilities 450
Food 600
Insurance 500
Transportation 350
Taxes 450
Monthly Total 5,400
Non Essential Living Expenses Non Essential Living Expenses
Vacation 1,050
Hobby / Entertainment 450
Family Gifting 600
Charity 500
Monthly Total 2,600
Monthly Total 8,000
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Determining Income NeedsSources of Retirement
Income
58 From Your Own Resources
40 From Outside Sources
Source Social Security Administration, Office of
Policy, Income of the Aged Chartbook 2004, Key
Sources of retirement income for households with
incomes of 40,000 or more per year. For
illustrative purposes only.
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Solving for Income NeedsPension Style Income
Variable Living Expenses 2,600 (travel,
gifting)
SocialSecurity1,500
Basic Living Expenses 5,400 (housing, food,
insurance, auto)

• Pension Style Income
• Dependable Income
• Guaranteed for Life
• Inflationary Protection

Pension500
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Todays Agenda

• Solving for Clients Income Needs
• Common Retirement Concerns
• Pension Style Income

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Common Concerns

• Static or Fixed Income Strategies
• Unprotected Withdrawal Strategies
• Chasing Market Performance

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Common ConcernsFixed Income Strategies
2005
1965 1.00

• 0.17

Source Headline Consumer Price Index
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Common ConcernsWhich Income Stream Would You
Prefer?
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Common ConcernsFixed Income Strategies

• Stable Income
• Guaranteed for the Clients Life
• Maintain Purchasing Power

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Common ConcernsUnprotected Withdrawal Strategies
Timing is everything when it comes to taking
income withdrawals from assets invested in the
stock market.
This example is hypothetical and is for
illustrative purposes only and not meant to
represent the performance of any particular
investment. It assumes a 7 average annualized
return on a 250,000 value rounded to the first
decimal. The various columns are intended to
demonstrate the impact of the sequence of
returns, assuming 5 annual withdrawals of
12,500 (increasing at 3 annually for
inflation). Past performance does not guarantee
future results. If this were an actual variable
annuity, various costs would be factored into the
gross return, including annual insurance and
administrative charges of the annuity, annual
contract charges, investment management fees of
the variable subaccounts, the cost for any
optional features, and any other applicable fees,
which would lower performance.
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Common ConcernsUnprotected Withdrawal Strategies
Recent Market Performance
A hypothetical 100,000 balance would have fared
from Dec. 31, 1999, thru March, 31 2007 in these
funds after regular withdrawals
Mutual Fund 5 Withdrawal 8 Withdrawal
Fidelity Magellan 47,797 19,175
Vanguard 500 Index 56,166 25,081
American Funds Invst. Co. of America 92,133 59,150
American Funds Washington Mutual 105,523 72,360
Fidelity Growth and Income 59,971 31,351
Fidelity Contra 83,630 48,361
American Century Ultra 30,403 5,212
Janus Fund 27,595 0
Janus Twenty 17,238 0
American Funds Euro Pacific 81,499 40,039
Source USA Today 4/27/07 - Funds ranked by
assets on 12/31/1999. Dividends and gains
reinvested. Withdrawals increased by 3 annually
for inflation. Source Lipper.
Past performance is not indicative of future
results. Values are inclusive of fees and
charges. Actual client expenses may vary
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Common ConcernUnprotected Withdrawal Strategies
T. Rowe Price Capital Appreciation Fund vs.
American Funds Washington Mutual Fund
Source Yahoo Finance Dec. 31, 1999 - March
2007
Past performance is not indicative of future
results
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Common ConcernsUnprotected Withdrawal Strategies
Monte Carlo Historical Perspective
Source T. Rowe Price Associates The withdrawal
rate is the percentage of assets withdrawn during
the first year of retirement and assumes that the
amount is increased by 3 annually to account for
inflation. The probability of success is
determined by running 500 market scenarios that
account for a wide variety of market return
possibilities. These results may vary with each
use and over time.
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Common ConcernsMonte Carlo
Important Legal Information This exhibit is not
intended to project or predict the present or
future value of the actual holdings in a
participants portfolio or of the performance of
a given model portfolio of securities. The
calculations and results generated are based upon
historical performance analysis of the stated
asset groups, goals and assumptions. The
historical annual data utilized is from 1926
through 2002 and is from Ibbotson Associates
stocks, bonds, and short-term investments are
represented by SP 500, U.S. Int. Government
Bonds, and U.S. 30-day T-bills. Investors may be
charged fees when investing in an actual
portfolio of securities, which are not reflected
in illustrations utilizing returns or market
segments.
This exhibit was calculated from several hundred
financial market return scenarios run to
determine how the asset mixes may have performed.
A 90 confidence level was utilized, indicating
that the percentage of assets withdrawn annually
could have been supported for the number of years
noted in 90 of the historical scenarios that
were generated. For example, the assets could
have supported a 4 withdrawal rate for 33 years
in 238 of 250 scenarios. The purpose of this
hypothetical illustration is to show how
portfolios may be created with different risk and
return characteristics to help meet a
participants goals. You should choose your own
investments based on your particular objectives
and situation. Remember, you may change how your
account is invested. Be sure to review your
decisions periodically to make sure they are
still consistent with your goals. You should also
consider all of your investments when making your
investment choices.
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Common ConcernsUnprotected Withdrawal Strategies

• Stable Income
• Guaranteed for the Clients Life
• Maintain Purchasing Power

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Common ConcernsChasing Market Performance
SP Returns for 20 years 19862005
SP 500Buy and Hold
11.9
AverageInvestor Return
3.9
Source Dalbar, Inc., Quantitative Analysis of
Investor Behavior 2006. Dalbar defines the
average investor as the universe of all mutual
fund investors whose actions and financial
results are restated to represent a single
investor. The study calculates the Average
Investor Return as the change in assets, after
excluding sales, redemptions and exchanges. This
calculation captures realized and unrealized
capital gains, dividends, interest, trading
costs, sales charges, fees, expenses and any
other costs. The total investor return rate is
determined by calculating the investor return
dollars as a percentage of the net sales,
redemptions and exchanges for the period. The SP
500 index is an unmanaged index of 500 stocks
from a broad range of industries whose collective
performance mirrors the overall stoack market.
Once cannot invest directly in an index. Past
performance is not indicative of future results.
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Common ConcernsChasing Market Performance

• Stable Income
• Guaranteed for the Clients Life
• Maintain Purchasing Power

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Todays Agenda

• Solving for Clients Income Needs
• Common Retirement Concerns
• Pension Style Income

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Pension Style IncomeVariable Annuity Features
Variable Annuities

• Benefits
• Tax Deferred Growth
• Participation in the Market
• Insurance Protection
• Lifetime Income
• Annuitization

• Considerations
• IRS Penalties May Apply
• Market Risk
• Cost of Insurance
• Surrender Penalties May Apply

Investors should carefully consider the funds
objectives, risk, charges, and expenses before
investing, as it contains this and other
pertinent information.
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Pension Style IncomeLiving Benefit Riders
Possible Benefits

• Stable Income
• Guaranteed for Life Life of Spouse
• Maintain Purchasing Power PPP Rider
• Market Participation
• Principal Protection
• Beneficiary Protection
• Preserve Principal

Benefits are available through optional riders
Features inherent within a rider are available
for an additional cost
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Pension Style IncomePurchasing Power Protector

• Guaranteed for Single or Joint Lifetimes
• Guaranteed Withdrawals Increase Annually with the
  CPI
• No Cap on Inflation Adjustment, Can Never
  Decrease
• No Forced Allocation of Funds
• Access to Account Value No Forced Annuitization
• GMDB Included in Price
• 65 Basis Points for Single Life (Maximum Charge
  1.25)
• 85 Basis Points for Joint Life (Maximum Charge
  1.25)

The Purchasing Power Protector and Growth
Income Protector are optional riders available
with Penn Mutuals Penn Freedom (LVA01), Pennant
Select(VAA-98) Enhanced Credit(BVA-00) Variable
Annuities. Policy form numbers may vary by state.
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Pension Style IncomePurchasing Power Protector

• Age Based Withdrawal Rates
• Under age 55 2.5
• Ages 55 59 3
• Ages 60 64 3.5
• Ages 65 69 4
• Ages 70 74 4.5
• Age 75 and Older 5

Percentage based on age of first withdrawal
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Pension Style Income Double Step Up
Policy Charges accessed include ME and BB
Charges. Optional Rider charges also included.
Indexes are unmanaged and investors cannot
invest directly in an index.
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Pension Style Income Guaranteed Purchasing Power

• Automatic Increases in Income Adjusted to
  Headline CPIQuickly Match and Exceed Payments of
  Higher Level Income

The above chart is for illustration purposes
only. The provided assumptions do not reflect
actual performance of any investment or
investment strategy and are not predictive of
future results. A clients individual results may
vary.
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Pension Style Income Protected Withdrawal
Strategies
10 Penns Freedom Variable Annuity
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Pension Style Income Protected Withdrawal
Strategies
10 Penns Freedom Variable Annuity
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Unprotected Withdrawal Strategies
T. Rowe Price Flexibly Managed Sub-Account
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Unprotected Withdrawal Strategies
T. Rowe Price Flexibly Managed Sub-Account
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Pension Style IncomeCost of Penns Freedom VA
Penn Freedom VA Cost Important Note
Mortality, Expense and Administrative Charges 1.45 Penns most expensive VA contract
PPP Rider .65 individual .85 joint life
Death Benefit - 0 - Included in price of withdrawal guarantee
Investment Expense .86 No forced Asset Allocation models
Total Cost 2.95 .50 - 1.5 less then industry average
Source VARDs Annuity Fact Book 2005
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Pension Style IncomeSolutions to Common Concerns
A variable annuity with an optional lifetime
withdrawal guarantee living benefit rider
Lifetime Withdrawal Guarantees Bond Yield Investment Withdrawal
Guaranteed Minimum Income? Yes Yes No
Guaranteed Payment for Life? Yes Yes Through End of Set Term No
Guaranteed to Maintain Purchasing Power? Yes No No
Upside Potential of the Market? Yes No Yes
Death Benefit? Yes No No
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Summary

• Capture Market Opportunity
• Add Value to Your Clients by Not Repeating Common
  Mistakes
• Protect Core Living Expenses with Pension Style
  Income

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Embracing the Opportunity

• Call Internal Marketing Specialist
• 800-818-8184, option 3
• Request Illustrations, Literature Marketing
  Material
• Set Appointment with Regional Annuity Specialist
• E-mail Internal Desk
• internalsalesdesk_at_pennmutual.com
• Download Illustration Request Form
• https//www.pennmutual.com/pmlwebsite/pages/PML_Pr
  ivate/attachments/prodinvestments/illustration_req
  uest.doc

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Disclaimer

• Penn Mutual variable products are offered through
  Hornor, Townsend, Kent, Inc., (HTK),
  Registered Investment Adviser, Member
  FINRA/SIPC, 600 Dresher Rd, Horsham, PA 19044,
  215-957-7300. HTK is a wholly owned subsidiary
  of The Penn Mutual Life Insurance Company.
•  
• Investors should carefully consider the
  investment objectives, risks, charges, and
  expenses of a variable insurance product before
  investing. Please carefully read the
  prospectuses for the relevant variable insurance
  product and its underlying investment options,
  which contain this and other information.
•  
• The preceding charts are for illustrative
  purposes only. The provided assumptions do not
  reflect the actual performance of any particular
  investment or investment strategy and are not
  predictive of future results. A clients
  individual results will vary.
•  
• Note Withdrawals from variable annuities prior
  to age 59 1/2 may result in a 10 federal tax
  penalty and may be subject to income tax. In
  addition, withdrawals taken in excess of a
  products free amount may be subject to penalty
  if taken within the surrender period.
• All guarantees are based upon the claims paying
  ability of the issuer.